liquid telecommunications holdings limited …jun 28, 2018 · development of our cloud and data...

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LIQUID TELECOMMUNICATIONS HOLDINGS LIMITED

FINANCIAL RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED 28 FEBRUARY 2018

Good progress in expanding and monetising our fibre footprint and the

development of our cloud and data centre solutions 28 June 2018 Leading pan-African telecoms Group Liquid Telecom, a subsidiary of Econet Global, today announces its financial results for the year-ended 28 February 2018. Financial highlights for the year ended 28 February 2018 We have delivered well in our core data services segments which, in addition to the benefit of the Neotel acquisition concluded on 7 February 2017, has enabled us to deliver strong growth in revenue and EBITDA on both a proforma and reported basis. Cash generated from operations increased by 109 per cent on revenues of USD 681 million and an EBITDA of USD 191.4 million. Year-end net debt of USD 601 million represents 3.1x EBITDA.

FY 2017-18 FY 2016-17 (proforma)

FY 2016-17 (Reported)

Proforma change

Reported change

(USDm) (USDm) (USDm) (%) (%) Revenue 680.9 594.6 343.0 14.5 98.5 Adjusted EBITDA 2 191.4 157.7 116.2 21.4 64.7 Cash generated from operations 184.0 n/a 87.7 n/a 109.8

Net Debt 1 601.0 n/a 467.1 n/a n/a 1 Net debt as at 28 February 2018 is defined as gross debt less unrestricted cash and cash equivalent. 2 Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation, and is also presented after adjusting for the following items: acquisition and other investment costs, foreign exchange (loss)/ gain, and share of profit from associate Strategic and operational highlights for the year ended 28 February 2018 • We have broadened our product portfolio and expanded our offering across our network, with significant sales

to enterprises, governments and MNOs. This includes South Africa’s freight utility Transnet; South Africa Western Cape and Eastern Cape governments; a global security firm with sites across our footprint and Kenya’ electricity utility KETRACO.

• Our fibre footprint increased by 3,900 kilometres following our investment in long-haul routes in South Africa, metro networks principally in South Africa, Zimbabwe, Zambia and Kenya and FTTH networks.

• We expanded our product capabilities through further investment in our data centres primarily in Johannesburg and Cape Town. This is complemented by the establishment of the Liquid Telecom digital market place where we provide digital and cloud-based services to our enterprise, wholesale and retail customers. This range of digital products also builds upon our new partnership with Microsoft, recognising us as a Tier 1 and Tier 2 Cloud Services Provider (CSP).

• In December, Royal Bafokeng Holdings (RBH) exchanged their shareholding in Liquid Telecom South Africa (“LTSA”) for a 10.34 per cent holding in Liquid Telecom Holdings providing the Group with 100 per cent economic interest in LTSA while maintaining our BEE status. This included a cash investment in the Group of USD22.2 million.

• In February 2018 we were awarded a 20-year fibre infrastructure licence to operate in the Democratic Republic of Congo and subsequent to the year-end we received our network facility and service licence in Botswana. Our operating licence in Zimbabwe was also renewed for 15 years.

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Chief Executive Officer, Nic Rudnick, commented: “I am pleased with the overall progress of the Group as we implement our corporate strategy to monetise the projects we have been delivering and further develop the Group into a solutions provider across our fibre footprint. This is reflected in our strong revenue and EBITDA performance. During the year, we have delivered the new South Africa data centre in Johannesburg with the second, in Cape Town expected to be delivered in the second half of the 2018. In addition, we have been awarded our national operating licence in Democratic Republic of Congo, connected more businesses and government buildings across our footprint, broadened our Fibre to the Home (FTTH) network in Zambia and a signed a memorandum of understanding with Sudatel in Sudan in order to deliver FTTH services. In addition, we have continued to roll out Kwesé Play and other content services across our network. As part of the development of the Group we are investing in both our own, and our customers’ digital transformation. Our evolution represents far more than just a set of new products and is central to our transition from being a supplier of connectivity and related services to becoming a fully integrated digital solutions provider. This means we are not only transforming our offering but also changing the way we engage with our employees and customers ensuring that our digital transformation will put the customers at the heart of everything that we do.” Group Executive Chairman, Strive Masiyiwa, added: “The Board continues to consider its strategic options for raising capital in order to provide additional funding to accelerate the Group’s growth plans. Building on our continued strong performance and improved capital structure, our clear corporate strategy will cement our competitive advantage as we continue to build Africa’s digital future.“ There will be an investor call at 14:00 BST (UK time) in order to present the results and answer questions. Please register on our website to gain access to the details for the call. (Note: these will only be provided to current and prospective approved investors, loan providers and rating agencies) For further information please contact: Liquid Telecom: Matthew Hickman, Head of Investor Relations, +44 (0) 20 7101 6100 FTI Consulting: Charles Palmer, +44 (0) 20 3727 1000 Adam Davidson, +44 (0) 20 3727 1000 About Liquid Telecom Liquid Telecom is a leading communications solutions provider across 13 countries in Eastern, Central and Southern Africa that serves mobile operators, carriers, enterprise, media and content companies and retail customers with high-speed, reliable connectivity, hosting and co-location and digital services.

It has built Africa’s largest independent fibre network, spanning over 50,000km, and operates state-of-the-art data centres in Johannesburg, Cape Town and Nairobi, with a combined potential 19,000 square metres of rack space and 80 MW of power.

This is in addition to leading cloud-based services, such as Microsoft Office365, Microsoft Azure, Symantec and Dropbox and innovative digital content provision including Netflix and Kwesé TV across our fibre footprint.

Through this combined offering Liquid Telecom is enhancing customers experience on their digital journey.

For more information, visit www.liquidtelecom.com - Ends -

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Chairman’s statement Group performance The financial year ended 28 February 2018 has been a standout year as we consistently delivered on our corporate strategy of providing telecommunications solutions to our customers. This was supported by the issuance of our first bond in July 2017. This, together with our bond tap in November, allowed us to simplify our capital structure. During the year, we have invested in and extended our fibre broadband network and broadened our product portfolio further into colocation, hosting, data storage and digital services. Trading for the year was strong, with the business delivering a 98.5 per cent increase in revenue to USD681 million. On a proforma basis, we have grown revenue by 14.5 per cent following a strong performance from our wholesale data, enterprise and retail segments. EBITDA grew by 64.7 per cent to USD191.4 million, and on a proforma basis by 21.4 per cent. This was primarily due to our focus on the higher margin data services as we continue to monetise our increasing fibre footprint, broadened product portfolio and knowledge base. Margins in LTSA are improving although it has taken longer than estimated to deliver the synergies within our South African entity following our focus on increasing new sales and service activation pipeline. Through the year we have continued to develop the Group as we build Africa’s digital future. The expansion of our fibre footprint to new destinations, broadening of our product portfolio into data centres supplied across Africa, the award of national operating licences in new countries such as the Democratic Republic of Congo (DRC) and Botswana and the building of partnerships with new and existing customers are pleasing and show our progress against our vision. Management changes After eleven years as CFO, Kate Hennessy left Liquid Telecom on the 30th April, in order to focus on her family. We wish her well and thank her for her service and commitment during a period in which she was instrumental in the growth and development of the Group. On 1 May 2018, we appointed Phil Moses as Group CFO. He comes with significant experience in the telecommunications sector most recently as CFO of Arqiva Group between 2011 and 2016. He has also served as BT’s Director of Investor Relations and Chief Financial Officer of BT OpenReach. We welcome him into the senior management team and look forward to his contribution. In addition, in April, we announced the appointment of Reshaad Sha as CEO of our South African operation to replace Kyle Whitehill. For the last five years, Reshaad has served as Chief Strategy Officer and Executive Director of Dark Fibre Africa, most recently also taking on the responsibility of CEO of SqwidNet. He will oversee the growth of digital services and the rollout of enhanced network services for enterprises and consumers across South Africa and is a key addition to the Group senior management team. Board and shareholder changes On 6 December 2017 we completed the agreement with our empowerment partner in South Africa, Royal Bafokeng Holdings, to exchange their shareholding in our South African operations for an equivalent 10.34 per cent ownership in our holding company. They will retain their voting rights in LTSA. This is a positive development which gives investors 100 per cent access to the future growth and cash flows in our South African operation, the largest business in Liquid Telecom and introduces a strong shareholder of outstanding repute to the board at the holding company level. As part of this exchange and, in addition to the LTSA shares, the company has received a cash component of USD22.2 million. As part of the evolution of the Group the Board approved the creation of five sub-committees in order to strengthen our corporate governance and support the Group’s further development. The committees comprise of the following:-

• Strategy and Investment; • Audit and Risk; • Corporate Social Responsibility and Ethics; • Related Party; • Remuneration

Throughout the year we made a number of appointments to guide and provide the necessary governance as the Group develops and delivers its corporate strategy. In June, Donald Gips joined the Board as an Independent Non-Executive Director and in November following the RBH share exchange transaction, we welcomed David Wilson as a Non-Executive Director. Vassi Naidoo continues in his role as Senior Independent Director and from April 2018 he was nominated as Chair of the Audit and Risk Committee. All three, bring a wealth of experience and skills to the Group.

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Innovation Partnerships As part of our strategy to deliver digital solutions and ecosystems for our customers, we have targeted innovation as an important element. In order to do this we are developing product pipelines and revenue generating partnerships on which we can leverage our existing infrastructure, technologies, market presence, internal expertise, as well as our strategic partners (such as Microsoft). Through our innovation partnerships, we also seek to nurture financially sustainable start-ups that build the enterprises of the future. Our aim has been to increase the number of African entrepreneurs, develop digital skills among the unemployed youth and contribute to the overall digital transformation of Africa. Importantly we have chosen to focus on bringing key solutions such as Cloud computing, Internet of Things (“IoT”), machine learning, Artificial Intelligence (“AI”), blockchain technology, media development and distribution, as well as game and application development. With that in mind, through the year the Group has initiated key innovation partnerships that are already having an impact for our customers such as Microsoft GoCloud where we are working with and providing solutions to over 100 start-ups in partnership with Microsoft and a number of educational and research institutions such as Strathmore Business School, Carnegie Mellon university, University of Johannesburg and the Council for Scientific and Industrial Research in South Africa. In addition, we have hosted and supported a number of gaming events in Kenya, Uganda and Zambia and are becoming a well-recognised brand within the African gaming ecosystem. Our people Our business has grown significantly over the last twelve months with our staff numbering 2,365 following the acquisition of Neotel which added 962 people to the business. With the evolution of the actions required to deliver our strategy, we are now also broadening our knowledge base from our core engineering skills to managed service capabilities and digital services. The Board and I are grateful to all our employees for their continued efforts during a time of significant change. The knowledge, commitment and values with which the company works are ever-more important as we broaden our capabilities and our brand grows. Awards Over the year we have received a number of prestigious awards including the “Best operator in an Emerging Market”, “Best Wholesale Service Provider in the Middle East and Africa” and “Best African Wholesale Carrier” for the sixth consecutive year. In addition, in May, we won the East AfricaCom award for best Network Improvement which celebrates the achievements of the people and companies at the forefront of digital transformation in East Africa. These awards demonstrate the strength of our business model and the value of the Liquid Telecom brand as a pan-African wholesale solutions provider. I would like to congratulate the Liquid Telecom Team which continues to work tirelessly to put the customer at the heart of all that what we do. Strive Masiyiwa

Group Executive Chairman

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Chief Executive Officer’s statement

Our strategic plans continue to develop well exemplified by our reaching new destinations, expanding our product offering and enhancing our brand in order to build Africa’s digital future. We signed a Memorandum of Understanding with Sudatel to deploy new FTTH networks in Sudan and other infrastructure-based products. We also entered into a commercial agreement with Kenya’s power utility KETRACO to commercialise their OPGW fibre across the country. Further, we were awarded a 20-year fibre infrastructure licence in the Democratic Republic of Congo, which opens many more opportunities to deploy new routes and connect more premises in this underserved area. We signed a landmark partnership agreement with China Telecom to step up network collaboration between Africa and Asia and better serve multinationals operating in the fastest growing economies across our combined footprint. We continue to explore geographic expansion opportunities, through partnership or focused acquisitions, with a view to increase the value of our existing network and provide a wider footprint to our wholesale and enterprise customers. After the period, this is shown by the receipt of a network facility and service licence in Botswana and the receipt of our licence in the Democratic Republic of Congo. We have made significant progress in broadening our product portfolio and expanding our offering across our network as we deliver on our strategic objective to become a single point of contact for customers’ communications and digital service needs. In South Africa, the upgrade of the data centres in both Johannesburg and Cape Town for one of the largest global cloud providers continues to progress well. We are also developing the ways we can add value to our customers by addressing more of their needs for digital services. This is illustrated through the increased investment in our products team and our new partnership with Microsoft to deliver cloud products and services. This is in addition to entering into a complementary partnership agreement where we will provide our customers with dedicated connectivity into Microsoft Online Services via Microsoft ExpressRoute. We also launched the “GoCloud” initiative in partnership with Microsoft, to accelerate innovation across Africa by using Azure Cloud platforms and launched the Liquid Launchpad initiative with Kwesé and the Meltwater Entrepreneurial School of Technology in South Africa to develop entertainment tech start-ups. In conjunction with our data centre and fibre route expansion, we have continued to diversify into new services to support our fast-growing retail segment, notably content services for consumers such as Netflix and Kwesé and off-the-shelf cloud services for Small office Home office (SoHo) and Small and Medium Enterprises (SMEs). Our combined offering will support our customers as they develop their business, creating a strong platform for their own digital transformation. The development of these solutions across our fibre footprint are an important part of our product offering as we go about delivering our vision of Building Africa’s digital future. Outlook Overall, trading in the full-year of 2017-18 has been strong when compared to the pro forma for 2016-17 and as part of our focus on delivery of our corporate strategy we will continue to manage our costs and cash flow closely. In addition, in the medium-term, with positive demand trends, the strengths of our highly skilled and evolving employee base, a diverse and expanding geographical footprint and market-driven product portfolio, the Group is well positioned to take advantage of emerging opportunities. The Group continues to consider its strategic options for raising capital in order to provide additional funding to accelerate its growth plans. Building on our continued strong performance and improved capital structure, our clear corporate strategy will cement our competitive advantage as we continue to build Africa’s digital future.

Nic Rudnick Chief Executive Officer

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OPERATIONAL AND FINANCIAL REVIEW

Liquid Telecom is a leading communications solutions provider across 13 countries in Eastern, Central, Southern and South Africa that serves carrier, enterprise and retail customers with high-speed, reliable connectivity and digital services. We have built Africa’s largest independent fibre network, spanning over 50,000km, and operate state-of-the-art data centres in Johannesburg, Cape Town and Nairobi, with a combined potential rack space of over 19,000 square metres. The Group is split into four segments Wholesale voice, Wholesale data, Enterprise and Retail. Wholesale voice We provide connectivity via fibre and satellite in the voice market into and out of Africa to national and international operators in addition to African mobile network operators. Many destinations in Africa still offer regulated prices set at levels where margins are attractive for international voice carriers. Our ability to carry voice traffic on our own fibre network from international interconnection points for our customers to the nearest point of interconnection with local voice service providers, is a major differentiator in an otherwise commoditised market place. In doing so, we are able to control the routing of the voice traffic, deliver high quality calls, avoid fraud schemes that are frequent on the international voice transit market and provide a stable and reliable service for our customers. Wholesale data Alongside this, our wholesale data division provides Global IP Transit and fibre connectivity to 2G, 3G and 4G mobile base stations across our extensive independent and self-owned fibre network and international leased lines. We cover a wide range of customers from international carriers to African mobile and public telecom operators and African Internet service providers. We also help other Internet Service Providers (ISPs) reach more customers with attractive offers using our wholesale FTTH services, monetising our open-access fibre network. In addition, we provide wholesale cloud and colocation services and we are a tier 2 supplier for Microsoft cloud services [across Africa]. Enterprise Our enterprise segment provides solutions to large-scale corporate and governmental consumers of bandwidth with complex, multi-country connectivity, colocation and hosting and cloud service. Here, in partnering with leading software, content and Internet service providers to package business service offerings, supported by our fibre local access networks and data centre facilities, we provide high-speed broadband, cloud and co-location services, VoIP and global connectivity to small and medium sized enterprises and non-governmental organizations, as well as payment solutions to financial institutions through our TPS business. We also aim to expand our metro and “Fibre to the Business” (FTTB) networks with a view to driving multi-tenancy growth in the buildings enabled to use the fibre network. Complementary VSAT and fixed-wireless (point-to-point or point-to-multipoint) networks extend the reach of the network to connect still-to-be-fibred or remote locations. Retail Our retail business connects households and small businesses through the provision of our Fibre to the Home (FTTH) through GPON and Fixed Wireless Access (FWA), primarily using 4G LTE technology. We believe that both FTTH and FWA, using our own infrastructure deployed in carefully selected areas, represents an important development opportunity for retail revenue growth with a focus on increasing our market share in the middle and top ends of the broadband Internet service segment. Our retail customers now have access to a range of digital services (Office365, Azure and laptop backups) and the Kwesé TV platform content across our network.

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Key performance indicators (KPI) The following table sets out the Groups’ key financial and operating measures by division for the 2017-18 year with the full year 2016-17 as a comparator.

(FY) 2016-174

(Q1) 2017-18 4

(Q2) 2017-18

(Q3) 2017-18

(Q4) 2017-18 FY 2017-18

Operating measures Wholesale voice Total wholesale voice minutes (in millions) on our network

482 382 402 380 306 1,470 Wholesale data Number of kilometres of fibre laid 1 6,072 964 927 1.085 957 3,933 Amount of IP Transit capacity sold (Mbps) 5 64,562 67,816 71,918 79,701 80,050 80,050 Enterprise Number of enterprise customers 6 10,042 10,042 10,875 11,293 11,494 11494 Retail Service penetration of GPON FTTH access networks (% of homes passed) 7 26.5% 30.4% 33.1% 34.3% 36.8% 36.8% Financial Measures Average churn rate 2 0.74% 0.84% 1.18% 1.87% 2.11% 1.55% New sales (“sold TCV for new services”, USD million) 3 84.6 67.5 63.1 109.4 49.4 289.4 Service Activation Pipeline (‘MRR backlog”) (USD 000) 1,579 1,368 1,889 4,479 4,515 4,515

Footnotes: 1 Represents the number of kilometres of new routes (including backbone, metro and FTTX) over which fibre is installed over a particular period. Multiple fibre cables or ducts within the same trench are only counted once. These numbers exclude Neotel (in FY2016-17), Raha (In FY 2016-17 and Q1 2017-18) and Zanlink (in FY 2016-17 and Q1 2017-18). 2 Average churn is defined as the monthly recurring revenue that was lost during the period following a termination of service due to disconnections, downgrades, price reduction, and non-renewals, divided by the monthly recurring revenue at the start of the period. Average churn rate for a period is calculated as the average of monthly churn. 3 The new sales (sold Total Contract Value (TCV) for new services) FY 2016-17 figures do not include Neotel, Raha or Zanlink. The numbers are for new business only and do not include upgrades. TCV includes the value of the non-recurring charges as well as the cumulative recurring charges over the term of the contract. 4 Includes Neotel, Raha but not Zanlink. 5 Amount of IP transit capacity sold to our customers, is calculated by counting the IP transit capacity purchased by each operation (on behalf of their own customers) from the Group entity. It excludes all other products such as international leased lines. 6 The number of enterprise customers has been restated from 13,398 in the Q1 results release to 10,042. In the second quarter it accounts for the number of customers instead of customer connections (Ugandan and Tanzanian entities still count customer connections). This is believed to be a better representation for this KPI. The number for February 28, 2017 includes connections in South Africa. 7 The service penetration of GPON FTTH access networks (% of homes passed) is defined as the number of subscribers (active in the last 90 days) divided by the number of premises passed.

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Revenue

Revenue per segment

For the twelve-month period ended

For the three-month period ended

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017

Audited Audited Audited Audited Audited Audited

Proforma Proforma Proforma Proforma

(USDm) (USDm) (USDm) %age (USDm) (USDm) (USDm) %age Wholesale voice traffic 146.9 146.3 123.2 0.4 34.1 37.3 32.1 (8.6) Data and Other services 534.0 448.3 219.8 19.1 160.9 116.6 72.6 38.0

Wholesale 219.3 171.0 118.1 28.2 76.2 39.6 38.7 92.4

Enterprise 265.2 233.8 73.4 13.4 72.1 65.3 25.6 10.4

Retail 49.5 43.6 28.3 13.5 12.6 11.7 8.3 7.7

Total Revenue 680.9 594.6 343.0 14.5 194.9 153.9 104.8 26.6

Footnotes: Proforma results for the three-month period ended 28 February 2017 include the results of Neotel and Liquid Group for the period 1 December 2016 to 28 February 2017 assuming the business was one Group. Proforma results for the twelve-month period ending 28 February 2017 include the results of Neotel and Liquid Group for the period 1 March 2016 to 28 February 2017 assuming the business was one Group.

On a proforma basis, taking account of the full-year performance of Neotel in the financial year 2017-18, in the full year we grew revenue by 14.5 per cent to USD 680.9 million following a good performance in the wholesale data, enterprise and retail segments as well as a better than expected performance in wholesale voice, despite a lower performance in the fourth quarter.

In the fourth quarter, on a proforma basis we grew revenue by 26.6 per cent to USD194.9 million following a strong performance from the wholesale data, and continued growth in enterprise and retail segments.

Following the integration of our South African sales operations, a number of contracts were renewed on the back of lower pricing. This helped secure long-term revenue streams and closer relationships with our customers. This has affected our churn but the impact has started to diminish in the fourth quarter. We also secured a total of USD289.4 million in new total contract value (TCV) during 2017-18 (FY 2016-17: USD84.6 million), an exceptional performance, demonstrated by an exceptional third quarter where several new key wins were structured with significant upfront revenues. The fourth quarter was flat, impacted by seasonal factors, such as the holiday period and a shorter month in February.

Key contracts in the year included: the provision of multi-site WLAN connectivity and VOIP services for large corporates and regional governments in South Africa; managed connectivity and dark fibre IRUs on key fibre routes (e.g. NLD 7 and 8) in South Africa; co-location and data centre hosting services for mobile operators cloud service providers and financial institutions; IP transit services to mobile operators and other Internet Service Providers (ISP’s) across our footprint and Microsoft Office365 subscriptions to corporates. We also secured a multi-year infrastructure deal to provide wholesale FTTH connections to a mobile operator in Eastern Africa. As a result of our focus on improving our sales, the service activation pipeline grew significantly over the year (by 185.9 per cent versus full-year 2016-17) to USD4.5 million (MRR only) in the fourth quarter, primarily driven by an increase in orders in the enterprise segment in South Africa.

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Wholesale voice In the full year wholesale voice revenue on a proforma basis increased by 0.4 per cent to USD 146.9 million. For the fourth quarter wholesale voice revenue decreased by 8.6 per cent to USD34.1 million (Q4 2016-17: USD37.3 million) with total minutes decreasing by 18.1 per cent to 306.8 million minutes (Q3 2017-18: 380.1 million minutes) with average revenue per minute increasing by 12.1 per cent to 11.1 US cents (Q3 2017-18: 9.9 US cents). In the fourth quarter, the increase in the average revenue per minute during the quarter is principally due to the increase in volumes to higher-rate destinations such as Zimbabwe, Burundi and Eritrea. In addition, our South African international revenue per minute increased following the deregulation of the international termination rate into South African Networks which was mentioned in the third quarter. In addition, the seasonal factors such as holidays and the shorter month of February coupled with our focus on high-margin traffic in South Africa since the acquisition of Neotel reduced the number of minutes in the fourth quarter compared to the previous quarter. In the fourth quarter of 2017-18, we signed new contracts with several local and global MNOs in order to access calls from and to European and United States subscribers, broadening our footprint in the African fixed line and mobile operator markets. However, we terminated fewer minutes to the United States in the fourth quarter versus the third quarter and this change in mix has resulted in increase in the international revenue per minute. Wholesale data

In the full year wholesale data revenue, on a proforma basis, increased by 28.2 per cent to USD 219.3 million. In the fourth quarter of 2017-18 revenue increased by 92.4 per cent to USD76.2 million (Q4 2016-17: USD39.6 million), principally due to a good performance mainly in South Africa, Zimbabwe, Kenya and Zambia. This very strong fourth quarter performance was aided by the billing of USD 24 million of IP backhaul service upgrades in Zimbabwe which were provided during the year. Revenues for the full year were driven by several significant long-term contracts for dark fibre, international leased lines and IP backhaul to MNOs and IP transit. As part of this growth, we entered into a number of long-term indefeasible rights of use (IRU) contracts with MNOs where we provide dark fibre along newly-built long distance routes, such as NLD 7 and 8 in South Africa, and connected a significant number of MNO base stations. We entered into a multi-year fibre infrastructure contract to provide wholesale FTTH connections to a mobile operator in Eastern Africa. Throughout the year and during the fourth quarter, we have expanded our network to provide fast and reliable connectivity to the busiest 4G mobile base stations in South Africa, Kenya, Tanzania, Zambia and Zimbabwe. In October 2017, we entered into a long-term partnership with the Kenyan Electricity Transmission Company Limited (KETRACO) to commercialise their fibre links built over the national electricity transmission grid across Kenya. We have started to implement with the first phase of the build and we expect to conclude the project in the second quarter of the 2018-19 financial year. This complements our strategy to further extend our fibre network to remote areas of Kenya and better interconnect neighbouring countries such as Ethiopia, Uganda, and Tanzania, as well as provide onward connectivity to Rwanda, Sudan, DRC and Burundi. As part of our strategy to self-fund the expansion of our fibre network, it remains important to secure wholesale infrastructure contracts (typically over 10 to 15 years) such as IRUs because they provide significant up-front cash inflows. On the back of these contracts, we have been able to invest in new long-haul routes and in the upgrade of our domestic and cross-border transmission capabilities, for example the upgrade of the East Africa Ring and of the South African backbone to 100Gbps wavelength technology. We have strong relationships with international carriers and MNOs with whom we have entered into long-term Master Service Agreements. We provide long-distance, cross-border connectivity services, as well as connectivity to mobile base stations. Our wholesale data customer base also includes competitors, to whom we supply managed services on an open-access basis and provide them with international capacity to access the Internet. Following the announcement in August 2017 of our agreement to partner in the acceleration of cloud services adoption in Africa with Microsoft, we built on those foundations as we were approved to become a wholesale supplier for Microsoft products across our Odin platform. This, in addition to our broader offering, has contributed to our working with more customers, such as China Telecom where we will provide Africa and Asia with connectivity and explore joint service opportunities.

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In February, we were awarded our nation-wide fibre infrastructure licence in DRC where we will deliver connectivity solutions to both wholesale and enterprise customers. In addition, and after the period, in June 2018 we were awarded our Botswana network facility and service licence which will provide us with further redundancy to Zimbabwe and the north. Enterprise

In 2017-18 enterprise revenues increased by 261.4 per cent to USD265.2 million (FY 2016-17: USD73.4 million) and revenue in the fourth quarter of 2017-18 increased by 181.6 per cent to USD72.1 million (Q4 2016-17: USD25.6 million) following the integration of Neotel (now trading as Liquid Telecom South Africa). On a proforma basis, our full year revenue increased by 13.4 per cent.

On a proforma basis, enterprise revenue in the fourth quarter of 2017-18 increased by 10.4 per cent to USD72.1 million (Q4 2016-17: USD65.3 million). The strong growth compared to last year's proforma revenue was principally due to increased revenue in Uganda, Kenya, Zambia, Zimbabwe and South Africa aided by the acquisition of Raha and Zanlink in Tanzania. By the end of the fourth quarter, the number of enterprise customers grew to 11,494 customers (Q3 2017-18: 11,293 customers) with the financial and governmental sectors the principal drivers of demand.

Following the acquisition of Neotel in February 2017, we grew our enterprise sales team and launched focused sales, advertising and marketing campaigns specifically designed to improve the visibility of our value proposition to selected industry verticals. We aim to take advantage of cross-selling and up-selling opportunities and provide pan-African digital services solutions to global and international companies based in South Africa in addition to those based in Kenya and our other locations. During the fourth quarter, we won a number of large contracts including multi-site WLAN connectivity and VOIP services for large corporates and regional governments in South Africa. We have made significant progress during the fourth quarter in broadening our service portfolio and expanding our product offering across our network as we work towards our strategic objective to become a single point of contact for enterprises’ communications and digital service needs. We are developing the ways we can add value to our customers by addressing more of their needs for digital solutions. This is illustrated in the third quarter through the delivery of Microsoft cloud products and services across Africa, such as dedicated connectivity into Microsoft Online Services via Microsoft ExpressRoute Meet-Me locations. We have secured significant contracts to provide Microsoft Office365 services to corporates across our footprint, in line with our expectations. We also launched the GoCloud initiative in partnership with Microsoft, to accelerate innovation across Africa by using Azure Cloud platforms, and the Liquid Launchpad initiative with Kwesé and the Meltwater Entrepreneurial School of Technology in South Africa, to support the development of African tech start-ups. Co-location and hosting services revenues grew by 60.0 per cent particularly in South Africa and Kenya, leading to investment in additional floor space in our data centre in Kenya. We are adding 500 square meters to the East Africa Data Centre in Nairobi, resulting in a total 1500 square metres of rack space, with a fourth floor available for further expansion. In South Africa, we are building significantly more space. The extension of the data centres in both Johannesburg and Cape Town for one of the largest global cloud providers continues to progress well with handover of the Johannesburg facility achieved in December 2017. Further additions will deliver a capability of 19,000 metres of rack space and up to 80.5 MegaWatts (MW) of available power across our footprint. Large governmental and non-governmental agencies rely on our transmission backbone and digital service capabilities to implement critical services to businesses and citizens. The largest contracts this quarter came from government entities, financial sector corporates, for connectivity, VoIP and data centre co-location services, and other multinational corporate accounts. In the fourth quarter, our payment solutions services grew 7.1% per cent over a quarter supporting 11.4 million (Q3 2017-18: 10.6 million) retail transactions (payments at a point of sale) worth an aggregate USD570 million (Q3 2017-18: USD522 million), an increase of 9.2 per cent over a quarter. We now have over 25,715 (Q3 2017-18: 24,606) point-of-sale (POS) terminals under management, with several pan-African banking institutions outsourcing their entire POS network to Liquid Telecom. In Zimbabwe we agreed a number of contracts to provide connectivity to the largest universities, government agencies, entertainment and transportation industries. In the year, we have continued to expand our fibre footprint. The acquisition of Zanlink in June added scale to our Tanzanian entity in what is a relatively new country of operations for the Group.

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Retail

Retail revenue in the twelve months of 2017-18 was USD49.5 million, a 74.9 per cent increase year-on-year (2016-17: USD28.3 million). Revenue in the fourth quarter of 2017-18 was USD12.6 million, a 51.8 per cent increase year-on-year (FY 2016-17: USD8.3 million).

On a proforma basis, retail revenue in the fourth quarter of 2017-18 increased by 7.7 per cent to USD 12.6 million (Q4 2016-17: USD 11.7 million). The performance was driven by increased service take-up of the fibre to the home (FTTH GPON) service in Zambia and Zimbabwe and from our new fixed wireless LTE broadband service in Zambia, offset slightly by a small reduction in customers in South Africa. This is in addition to our continued good performance in Kenya where we have provided services to a large MNO incumbent throughout the year.

During the fourth quarter, we have continued to diversify into value added services to support our fast-growing retail segment, notably content services for consumers and off-the-shelf cloud services for Small Office Home office (SoHo) and Small and Medium Enterprises (SMEs) such as Office 365 and Microsoft Azure cloud services. Our enriched offering improves the quality of our relationship with customers, reduce churn by making our services more relevant to them, help our SoHo and SME customers develop their own business and create a platform for a richer digital life for all our customers. Following a further review of how best to enter the content delivery business, we decided to partner with Kwese Play on their content streaming business only, a development which has allowed us to unwind the purchase of a 19.98% stake the Group had acquired in Econet Media Limited for USD60 million. We will continue to support customers in streaming Econet Media’s content such as Netflix and Kwesé TV across our network in our retail and wholesale segments. New FTTH customers, in Kenya, Rwanda, Zambia and Zimbabwe, have driven service penetration growth (as a per cent of premises passed), with an average 36.8 per cent of premises passed (Q3 2017-18: 34.3 per cent). Add-on services, such as discounted night-time packages, and competitive pricing have contributed to strong commercial performance in terms of rapid customer acquisition, low churn and stable average revenue per customer. Every month we see customers upgrading from entry-level, capped FTTH packages to our unlimited, premium packages, helping sustain a higher average ARPU over time. FTTH networks were expanded in Lusaka (Zambia) and Kigali (Rwanda) this year.

In Zambia, we are expanding the coverage of our LTE fixed wireless broadband network in several cities to address a larger share of the broadband market, following strong demand for our services. The number of fixed LTE customers continues to increase in Zambia, driven by an aggressive commercial effort and the deployment of additional LTE base stations during the period. In Zimbabwe, we started to roll-out our LTE fixed wireless broadband and launched commercially after the period. We also introduced new broadband data bundles from our FTTH packages.

12

Gross profit

Gross Profit

For the twelve-month period ended

For the three-month period ended

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017



(USDm) (USDm) (USDm) %age (USDm) (USDm) (USDm) %age

Gross Profit 426.8 359.6 205.3 18.7 131.8 95.9 65.8 37.4

Gross Margin % 62.7% 60.5% 59.9%

2.2 percentage

points 67.6% 62.3% 62.8%

5.3 percentage

points Footnotes

(1) Proforma results for the three-month period ended 28 February 2017 include the results of Neotel and Liquid Group for the period 1 December 2016 to 28 February 2017 assuming the business was one Group and Proforma results for the twelve-month period ending 28 February 2017 include the results of Neotel and Liquid Group for the period 1 March 2016 to 28 February 2017 assuming the business was one Group

In 2017-18, total gross profit was USD426.8 million, 107.9 per cent above 2016-17. For the 3 months ended 28 February 2018, total gross profit was USD131.8 million, 100.3 per cent above the fourth quarter in 2016-17.

On a proforma basis, in the full year, gross profit increased by 18.7 per cent to USD426.8 million and in the fourth quarter was 37.4 per cent higher when compared to the proforma fourth quarter last year. This follows a good performance in South Africa, Kenya, Zimbabwe and Zambia. The gross profit margin in the fourth quarter of the year improved from 62.3 per cent to 67.6 per cent when compared to proforma last year principally driven by the strong growth in high margin wholesale data where we billed USD 24 million of service upgrades to an MNO in Zimbabwe relating to the whole year. This, combined with a good performance from our retail and enterprise segments was partially offset by the decrease in wholesale voice margins.

Liquid Telecom South Africa is working well towards delivering solutions across its network throughout a customers’ digital journey. In addition, the wholesale data industry has seen increased competition which has impacted our volumes and prices. However, our diversified business model, our broadening product portfolio and our developing fibre footprint are enabling us to manage the challenge well.

13

Total overheads and other income

Total Overheads and Other Income

For the twelve month period ended

For the three month period ended

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017




Other Income 1.3 2.6 2.2 (50.0) 0.6 1.6 1.6 (62.5) Selling and distribution costs (19.3) (18.5) (7.7) 4.3 (9.4) (10.8) (2.9) (13.0) Administrative Costs (102.7) (87.7) (32.0) 17.1 (29.9) (21.8) (10.8) 37.2

Staff Costs (114.9) (98.2) (51.5) 17.0 (31.5) (24.1) (14.3) 30.7 Total Overheads and Other Income (235.6) (201.8) (89.0) 16.7 (70.2) (55.1) (26.4) 27.4 % to Total Revenue 34.6% 33.9% 25.9%

+70 basis points 36.0% 35.8% 25.2%

+20 basis points

Footnotes (1) Proforma results for the three-month period ended 28 February 2017 include the results of Neotel and Liquid Group for the period 1

December 2016 to 28 February 2017 assuming the business was one Group and Proforma results for the twelve-month period ending 28 February 2017 include the results of Neotel and Liquid Group for the period 1 March 2016 to 28 February 2017 assuming the business was one Group

For the full year on a proforma basis, overheads and other income increased by 16.7 per cent to USD 235.6 million. In the fourth quarter overheads and other income increased by 27.4 per cent year-on-year to USD70.2 million. Overheads as a percentage of revenue in the fourth quarter increased to 36.0 per cent from 35.8 per cent in the fourth quarter 20-16-17. In the full year, on a pro forma basis, selling and distribution costs rose 4.3 per cent to USD19.3 million principally because of increase in marketing costs post the Neotel acquisition, partially offset by lower bad debt costs. For the fourth quarter, selling and distribution costs decreased by 13.0 per cent to USD9.4 million due to higher marketing costs in 2016-17 as we incurred one off rebranding expenses, after acquiring Neotel. Additionally, in 2017-18, on a proforma basis, administration costs increased by 17.1 per cent to USD102.7 million following the investment in network support as the scale of the Group increased and we expanded our digital services offering. In addition, we migrated computer services away from a previous supplier as part of the integration into Liquid South Africa and we improved the governance structure of the Group. During the fourth quarter, on a proforma basis administration costs increased by 37.2 per cent to 29.9 million principally due to continued upscaling of our IT services in South Africa and our investment in expanding our fibre footprint, as well as some year-end directors fees. Finally, our staff costs during the year, on a proforma basis, increased by 17.0 per cent to USD114.9 million following the increase in our employee numbers to 2,395 at the year-end (FY 2016-17: 2,131). This is principally due to the acquisition of Zanlink in June 2017 and the continued expansion of our product, sales and engineer teams as we expand the network and increase our product portfolio and the insourcing of the call centre staff in our South African entity. In addition, we increased our sales and systems capabilities in line with the requirements of the Group. During the fourth quarter, staff costs increased by 30.7 per cent to USD 31.5 million, reflecting the growth in staff numbers and higher bonus and commission payments accrued at the year end. Other income principally consists of sundry income and profit and loss from the sale of fixed assets.

14

Adjusted EBITDA and profit

Adjusted EBITDA

For the twelve month period ended For the three month period ended 28

February 2018

28 February

2017

28 February

2017 2018

versus 2017

28 February

2018

28 February

2017

28 February

2017 2018

versus 2017




Adjusted EBITDA 191.4 157.7 116.2 21.4 61.1 40.8 39.4 49.8

Adjusted EBITDA margin % 28.1% 26.5% 33.9%

+160 basis

points 31.3% 26.5% 37.6%

+483 basis

points Depreciation, impairment and amortisation (94.3) (78.4) (38.4) 20.3 (31.7) (19.4) (10.8) 63.4

Acquisition costs (2.5) - (4.5) n/a (1.3) - (3.2) n/a

Interest income 3.4 5.3 1.6 (35.8) 0.3 2.1 0.6 (85.7)

Finance costs (79.0) (53.9) (13.8) 46.6 (17.3) (18.0) (7.2) (3.9) Share of profit of associate 0.1 0.1 - - - - - n/a Foreign exchange (loss) / gain (1.3) 5.9 2.0 n/a (0.6) 0.8 (0.2) n/a

Profit before tax 17.7 36.7 63.1 (51.8) 10.5 6.2 18.6 69.4

Tax expense (17.6) 26.0 (9.0) n/a (12.6) 29.4 (4.3) n/a

Profit for the period 0.1 62.7 54.1 n/a (2.0) 35.6 14.3 n/a Footnotes

(1) Proforma results for the three-month period ended 28 February 2017 include the results of Neotel and Liquid Group for the period 1 December 2016 to 28 February 2017 assuming the business was one Group and Proforma results for the twelve-month period ending 28 February 2017 include the results of Neotel and Liquid Group for the period 1 March 2016 to 28 February 2017 assuming the business was one Group

(2) Adjusted EBITDA is defined as earnings before interest, tax, depreciation and amortisation, and is also presented after adjusting for the following items: acquisition and other investment costs, foreign exchange (loss)/ gain, and share of profit from associate

Adjusted EBITDA in 2017-18, on a proforma basis increased by 21.4 per cent to USD191.4 million. In the fourth quarter adjusted EBITDA increased by 49.8 per cent. The full year increase was driven by the change of product mix in favour of higher margin segments such as wholesale data, enterprise and retail, offset by investment in marketing for the rebranding of Neotel and higher staff and administration costs, partially driven by costs of the migration of computer services. EBITDA grew faster in the fourth quarter of the year (year-on-year) principally because of the revenue growth in the wholesale data.

Depreciation, impairment and amortisation in 2017-18 increased by 20.3 per cent to USD94.3 million on a proforma basis principally driven by amortisation of purchase price adjustments such as customer relationships, brand, and fair value adjustment to the network, buildings and spectrum arising from the acquisition of Neotel and Raha in the prior year and Zanlink in the 2017-18 year.

Finance costs in 2017-18 increased by 46.6 per cent to USD 79.0 million on a proforma basis, predominantly due to the arrangement fees written off (USD 24.6 million) relating to loans refinanced in July and November 2017.

Profit before tax in 2017-18 was USD 17.7 million (FY 2016-17 proforma: USD 36.7 million). For the fourth quarter of 2017-18, the profit before tax was USD 10.5 million (Q4 2016-17 proforma: USD 6.2 million).

Tax expense for the twelve months of 2017-18 was USD 17.6 million.

Profit after tax for the twelve months of 2017-18 was USD 0.1 million (FY 2016-17 proforma: profit of USD 62.7 million) largely due to the prior year proforma benefits from a large tax credit.

15

Cash generated from operations

For the twelve month period ended

For the three month period ended

28 February

2018 28 February

2017 28 February

2018 28 February

2017

Cashflow Audited Audited Audited Audited

(USDm) (USDm) (USDm) (USDm) Cash generated from operations 184.0 87.7 84.8 43.1

Net cash (used in)/ from operating activities 181.0 86.1 84.9 41.8

Net cash used in investing activities (269.2) (110.9) (46.5) (47.3)

Net cash used in financing activities 82.7 65.1 (20.7) 94.3

Net increase / (decrease) in cash and cash equivalent (5.5) 40.3 17.7 88.7

Cash flow generated from operations in 2017-18 increased by 109.8 per cent to USD184.0 million (FY 2016-17: USD87.7 million). In the fourth quarter of 2017-18, cash flow from operations increased from USD43.1 million to USD84.8 million. During the year, strong growth in EBITDA was offset by a small increase in working capital due to expansion of trade receivables as the business grows.

During the year, cash generated from financing activities was USD82.7 million, principally relating to the issuance of USD730.0 million senior secured notes offset by the refinancing of existing term loans. This additional cashflow was used to provide funding for capital expenditure. Capital investment and network developments During the year, we invested USD201.9 million (FY 2016-17: USD80.6 million) of capital expenditure to support the long-term growth across our segments. The increase in capital expenditure was principally due to the acquisition of Neotel and our investment in data centres in South Africa. In the fourth quarter of 2017-18, capital expenditure was USD43.8 million (FY 2016-17 USD15.6 million) In February 2018 we unwound the USD60 million investment in Econet Media Limited made in the third quarter. This USD60 million is shown within receivables from Econet. For the wholesale data segment, during the twelve months, we have invested into building further additional backbone fibre spurs and metropolitan fibre networks, in particular in Kenya, Rwanda, South Africa and Zimbabwe. In addition, we broadened the reach of our network where we now serve additional wholesale customers by connecting more mobile base stations, which was also used to serve additional enterprise customers. We have worked with national authorities in Botswana and after the period obtained nationwide fibre wholesale and retail licences. We are partnering with national authorities to provide fast broadband over satellite to primary schools in Eastern Africa for the next 5 years. In February 2018, a nation-wide fibre wholesale and retail licence was awarded to Liquid Telecom DRC allowing further investment in long-haul, metro and fibre access infrastructure in the next financial year. This will enable us to activate new long-haul fibre networks, such as a 2500km-long fibre-over-powerline (OPGW) link. In Zimbabwe, we completed an OPGW project to provide further physical network redundancy and reliability across the region, in addition to the dualisation of the Harare-to-Masvingo route. Also, we invested in active equipment to increase the reliability (e.g. security systems and power generators) and capacity (e.g. new switches and routers) of our network, in particular in Kenya. We took on a new long-term lease (IRU) for additional international capacity on international submarine cables to support our growth. For the enterprise segment, during the twelve months, we have worked on the rebranding of Neotel to Liquid Telecom South Africa, aligning its business model and proposed solutions for our South African enterprise customers closer to that offered by our other African operations, has been a major success with a strong buy-in from employees and customers alike.

16

We also invested significantly in our infrastructure in South Africa to use our own local access networks (instead of relying on third parties) to deliver services to enterprises, create a seamless international network from Cape Town to Nairobi and offer a greater customer experience across our operations. We have also made additional investments in core and IT infrastructure in South Africa, which will enable strong growth in connectivity and digital services across our footprint as part of our strategy to diversify into value-add services. We continued the expansion of our data centres, on the back of a contract with a large Over The Top cloud services provider in South Africa, strong demand in Kenya and interconnecting points of presence and internet exchanges. In February 2018, we opened the South Africa Data Centre in Johannesburg, to support rising demand for cloud-based services in Southern Africa. We are investing in Kenya to build the third phase of the EADC data centre, which will increase the available floor space by 500m2. We delivered more MPLS and Direct Internet Access (DIA) connections to our enterprise customer base, including connectivity between sites, Internet access as well as VoIP and cloud-based services. We are now delivering significant government contracts, some of which were won in the first quarter, in particular in South Africa (such as additional services to the Western Cape Government where we are linking 1,964 sites, to the Eastern Cape Government and National Long Distance backbone routes), from non-governmental organisations (such as United Nations agencies across our footprint) and from financial institutions. This lead to further investment in fibre infrastructure on the back of these contracts. We are introducing an upgraded system to improve our enterprise voice offering, including unified communications, which is now being rolled out across our operations. In Kenya, we are upgrading the WiMAX network to a new generation WiMAX 16E network to deliver wireless broadband connections to our enterprise customer base that cannot be served economically with fibre yet. Across our operations, we are delivering on our strategy to own the end-to-end fibre network on which we deliver services to enterprises, by investing in dedicated fibre customer connections. In May 2017, our carrier-independent data centre in Nairobi (branded EADC) received its formal certification as a tier 3 data centre, which we have marketed to our international and regional accounts and thus received significant interest for additional rack space. In November 2017, we announced a new investment, with an arrangement with Telesat, to deliver enhanced satellite services to enterprise customers in Central and Southern Africa, with a seamless integration with our pan-African fibre network. For the retail segment, during the twelve months, we continued building fibre-to-the-home (FTTH) local access networks, connecting over 1000 new premises per month across our FTTH footprint (which includes Kenya, Rwanda, Zambia and Zimbabwe) and rolling out hundreds of kilometres of local fibre access network every month. We are also extending the coverage of our fixed wireless access networks (mainly using 4G LTE technology) that enable us to deliver broadband Internet access customers commanding a lower priced service and/or outside of FTTH areas. In Zambia, we already cover around 45,000 premises with a total of 42 LTE base stations and are deploying over 160 new base stations to significantly extend this coverage to the largest cities in the country in FY18-19. In Zimbabwe we started rolling out a similar LTE network in several key cities with 50 base stations and the commercial launch was held after the period in Q1 FY18-19. In South Africa, we maintain an extensive LTE and CDMA network serving around 80,000 active customers, with voice and Internet access services.

17

Net debt

Net Debt 28 February 2018 28 February 2017 (USDm) (USDm)

Total Gross Debt 761.7 608.2 Less: Unrestricted cash 160.7 141.0

Net debt 601.0 467.1 EBITDA 191.4 116.2 Covenants

Gross debt / EBITDA (x) 3.98 5.23 Net Debt / EBITDA (x) 3.14 4.02

Net debt, as at 28 February 2018, stood at USD601.0 million compared to USD467.1 million as at 28 February 2017, following the issuance and tap of our senior secured note totalling USD730.0 million. Our drawings were used to refinance existing debt and invest in, as mentioned previously, increased working capital and the investment in new infrastructure and products to further support the expansion of our network and product offering. For further information on the constitution of our gross debt please refer to note [12]. The long-term policy of the group is to have a net debt to EBITDA ratio of between two and three times. We are well positioned to achieve that target as we expand our fibre footprint and grow our EBITDA. Shareholder changes On 6 December, we completed the agreement with our empowerment partner in South Africa, Royal Bafokeng Holdings, to exchange their shareholding in our South African operations plus a cash adjustment for an equivalent 10.34 per cent ownership in our holding company. Their voting rights will remain in our South African operation. As part of this exchange, and in addition to the Liquid Telecom South Africa shares, the company received a cash component of USD 22.2 million. This is an exciting move which gives investors 100 per cent access to the future growth and cash flows in our South African operation, the largest business in Liquid, and introduces a strong shareholder of outstanding repute at the holding company level. Strive Masiyiwa Nic Rudnick Phil Moses Group Executive Chairman Chief Executive Officer Chief Finance Officer 28 June 2018


CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the 12 months period ended 28 February 2018

Notes 28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000

(Audited) (Audited) (Unaudited) (Unaudited)

Revenue 3 680,948 342,992 194,938 104,783

Interconnect related costs (121,141) (89,516) (29,257) (24,189)

Data and network related costs (176,413) (54,672) (45,819) (17,301)

Other income 1,343 1,861 552 1,290

Dividend received - 308 - 308

Selling, distribution and marketing costs (19,258) (7,721) (9,359) (2,916)

Administrative expenses (59,227) (25,584) (18,455) (8,282)

Staff costs (114,863) (51,472) (31,520) (14,284)

Adjusted EBITDA 3 191,389 116,196 61,080 39,409

Depreciation, impairment and amortisation (94,347) (38,417) (31,711) (10,848)

Acquisition and other investment costs (2,494) (4,477) (1,329) (3,236)

Operating profit 94,548 73,302 28,040 25,325

Interest income 4 3,383 1,554 310 629

Finance costs 5 (78,961) (13,785) (17,273) (7,203)

Foreign exchange (loss) / gain (1,314) 2,032 (555) (161)

Share of profits of associate 76 3 16 3

Profit before taxation 17,732 63,106 10,538 18,593

Tax expense 6 (17,594) (9,037) (12,556) (4,336)

Profit / (loss) for the year 138 54,069 (2,018) 14,257

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Translation gain on accounting for foreign entities 81,499 11,019 93,509 10,494

Fair value gain on available-for-sale investments - 1,681 - -

Other comprehensive gain for the year 81,499 12,700 93,509 10,494

Total comprehensive profit for the period 81,637 66,769 91,491 24,751

Profit / (loss) attributable to:

Owners of the company (12,895) 45,688 (8,723) 11,064

Non-controlling interest 13,033 8,381 6,705 3,193

138 54,069 (2,018) 14,257

Total comprehensive profit attributable to:

Owners of the company 72,275 55,086 84,197 18,170

Non-controlling interest 9,362 11,683 7,294 6,581

81,637 66,769 91,491 24,751

(Loss) / earnings per share

Basic and diluted (Cents per share) (12.56) 45.69 (8.49) 11.07

12 months period ended 3 months period ended

1


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 28 February 2018

Notes 28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Non-current assets

Goodwill 7 160,522 145,833

Intangible assets 8 185,921 174,396

Property, plant and equipment 9 764,866 600,991

Investment in associates 506 378

Investments 12,447 15,785

Deferred tax assets 37,115 31,173

Held to maturity investments 3,206 2,952

Long-term receivables 10 1,153 6,409

Total non-current assets 1,165,736 977,917

Current assets

Inventories 31,310 22,134

Trade and other receivables 11 277,278 166,146

Taxation 957 239

Held to maturity investments - 245

Cash and cash equivalents 160,718 141,048

Restricted cash and cash equivalents 2,937 11,688

Total current assets 473,200 341,500

Total assets 1,638,936 1,319,417

Equity and liabilities

Capital and reserves

Share capital 3,319 1

Share premium 116,765 2,333

Retained earnings 233,646 283,582

Foreign currency translation reserve 79,831 (5,338)

Total equity attributable to owners of the parent 433,561 280,578

Non-controlling interests 94,019 147,010

Total equity 527,580 427,588

Non-current liabilities

Long-term borrowing 12 731,214 589,402

Long term provisions 922 4,059

Other long term payables 15,880 10,094

Deferred revenue 14 53,702 42,829

Deferred tax liabilities 47,736 35,590

Total non-current liabilities 849,454 681,974

Current liabilities

Short-term portion of long-term borrowing 12 15,019 5,210

Trade and other payables 13 201,321 176,294

Short term provisions 8,523 4,273

Deferred revenue 14 27,188 22,027

Taxation 9,851 2,051

Total current liabilities 261,902 209,855

Total equity and liabilities 1,638,936 1,319,417

2


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Group

Foreign

Investment currency Non-

Share Share Revaluation translation Retained controlling Total

Capital Premium reserve reserve earnings interest Equity

USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000

At 1 March 2016 1 2,333 (11,319) (13,055) 294,865 54,564 327,389

Change in ownership - - - - (3,530) 68,241 64,711

Profit for the period - - - - 45,688 8,381 54,069

Foreign exchange gain - - - 7,717 - 3,302 11,019

Fair value gain on available-for sale investments - - 1,681 - - - 1,681

Acquisition of subsidiaries - - - - - 2,528 2,528

Dividend - - - - (48,898) - (48,898)

Profit on disposal under common control - - - - 5,095 - 5,095

Reclassifaction upon disposal - - 9,638 - (9,638) - -

Equity loan - - - - - 9,994 9,994

At 28 February 2017 1 2,333 - (5,338) 283,582 147,010 427,588

At 1 March 2017 1 2,333 - (5,338) 283,582 147,010 427,588

Issue of share capital 3,318 114,432 - - (2,862) - 114,888

Change in ownership - - - - (20,679) (64,024) (84,703)

Profit for the period - - - - (12,895) 13,033 138

Foreign exchange gain - - - 85,169 - (3,670) 81,499

Dividend - - - - (13,500) - (13,500)

Acquisition of subsidiaries - - - - - 1,670 1,670

At 28 February 2018 3,319 116,765 - 79,831 233,646 94,019 527,580

3


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


Notes 28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000


Cash flows from operating activities:

Profit before tax 17,732 63,106 10,538 18,593

Adjustments for:

Depreciation 9 67,815 31,932 18,599 11,120

Amortisation 8 26,198 5,143 12,903 (1,183)

Impairment of property, plant and equipment - 136 - -

Stock written off 205 1,194 201 911

Obsolete stock provision 129 12 8 -

Bad debts provision 5,091 (422) 6,201 (600)

Bad debts recovered (205) (1,207) (27) (1,206)

Increase / (decrease) in provisions (2,765) (53) (2,713) (86)

Foreign exchange (gain) / loss (158) (1,651) (1,233) 225

(Profit) / loss on disposal of fixed assets (275) 19 (66) 27

Interest income 4 (3,383) (1,554) (310) (629)

Finance costs 5 78,961 13,785 17,273 7,203

Share of profits of associates (76) (3) (16) (3)

189,269 110,437 61,358 34,372

Working capital changes:

(Increase) / decrease in inventories (8,723) 4,685 (5,700) (3,373)

(Increase) / decrease in trade and other receivables (41,483) (42,864) (2,085) 7,576

Increase in trade and other payables 17,455 3,346 28,972 3,882

Increase / (decrease) in deferred revenue 10,763 7,538 (10,828) (1,571)

Increase in accruals 19,809 4,921 14,538 2,060

(Decrease) / increase in unfavourable contracts (3,135) (373) (1,474) 129

Cash generated from operations 183,955 87,690 84,781 43,075

Income tax (paid) / received (2,930) (1,620) 77 (1,316)

Net cash generated from operating activities 181,025 86,070 84,858 41,759

Cash flows from investing activities:

Interest income 4 3,128 1,554 55 629

Acquisition of other investments (63,162) (781) (2,450) (102)

Disposal of investments in subsidiary - (3) - -

Acquisition of subsidiary companies (17,589) (27,674) 83 (27,674)

Purchase of property, plant and equipment 9 (190,662) (71,880) (45,136) (15,178)

Proceeds on disposal of property, plant and equipment 2,359 1,730 (271) 1,647

Purchase of intangible assets 8 (11,250) (8,715) 1,385 (468)

Proceeds on disposal of intangible assets 2,693 30 (498) 30

Proceeds from held to maturity investments 245 156 180 303

Decrease / (increase) in long term receivables 5,000 (5,278) 166 (6,525)

Net cash used in investing activities (269,238) (110,861) (46,486) (47,338)

Cash flows from financing activities:

Dividend paid (13,500) (26,800) (13,500) (23,500)

Finance costs (55,887) (13,785) (32,666) (7,203)

Issue of subsidiary share capital & equity loans to minorities 68 75,566 - 75,566

Issue of share capital 22,222 - 22,222 -

Increase in external long-term loan borrowings 129,822 30,132 3,258 49,460

Net cash generated from / (used in) financing activities 82,725 65,113 (20,686) 94,323

Net increase in cash and cash equivalents (5,488) 40,322 17,686 88,744

Cash and cash equivalents at beginning of the period 152,736 100,397 135,991 52,595

Translation of cash with respect to foreign subsidiaries 16,407 12,017 9,978 11,397

Cash and cash equivalents at end of the period 163,655 152,736 163,655 152,736


4


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1. General information

2. Accounting policies

Basis of preparation

Going concern

Accounting policies

Liquid Telecommunications Holdings Limited is a private company incorporated in Mauritius on the 26th January 2007 and is the holder of a

Category 2 – Global Business Licence Company as from 29 January 2007. Its registered office is situated at 10th floor, Standard Chartered

Tower, 19-21 Bank Street, Cybercity, Ebene, Mauritius. The company’s main activity is to carry on the business of a holding company in

respect of subsidiary companies throughout the world, whilst the group's business is to develop a global telecommunications and

technology business with a focus on Africa. This has remained unchanged since the prior year.

The directors have reviewed the consolidated cash flow projections of Liquid Telecommunications Holdings Limited (“the group”), for the

forthcoming period of twelve months from 1 March 2018 up to and including 28 February 2019 as well as the material cash flows that could

result through to 30 June 2019. Considering the available cash position as of 28 February 2018, the cash flow projections for the period

(which include discretionary capital expenditure), the repayment of existing obligations and access to new capital and loan funding, the

directors are satisfied that the group, has access to adequate cash resources to settle obligations as these arise and that operations reflect

financial sustainability to enable the business to continue in operational existence for the foreseeable future.

The accounting policies applied by the Group in the preparation of the condensed consolidated financial statements pesented are in

accordance with IFRS and are consistent with those applied by the Group in the preparation of the financial statements for the year ended

28 February 2018.

These financial statements are presented in United States Dollars (USD) as this is the currency in which the majority of the group's

transactions are denominated.

The condensed consolidated interim financial statements for the twelve months ended 28 February 2018 have been prepared in accordance

with IAS 34 Interim Financial Reporting.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported

amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the

reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results

ultimately may differ from those estimates.

• The group has a cash position of USD 160.7 million as well as a positive net current asset position further enhancing the going concern

assumption for the group as at 28 February 2018.

Based on the assessment made and articulated in the reasons set out above, the directors are of the opinion, that the adoption of the going

concern assumption for the preparation of the financial statements as of 28 February 2018 is justified.

The going concern assumption is supported by the following key considerations:

• The group has successfully completed a capital raising project during the year ended 28 February 2018 which has resulted in a USD 730.0

million 8.5% senior secured notes being issued that has no capital repayments until July 2022. Through this, the group repaid existing debt

including the term loan of ZAR 2.95 billion (USD 228.0 million) for the acquisition of Liquid Telecommunications South Africa (Pty) Limited

which was due in May 2018 and term loans totalling USD 300.0 million repayable over five years until December 2022.

• On 28 February 2018, the group was owed various trade and short term receivables from Econet Group per Note 15. Econet Group has

paid USD 22.5 million to the group post year end. A further USD 59.9 million will be paid on completion of a facility agreement between

Econet Group and certain financial institutions. Econet Group is currently in the process of fulfilling the conditions to signing the agreement

which are administrative in nature and are expected to be fulfilled.

5


NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


3. Segment information

3.1 Segment revenue and results

Data and other services

Wholesale - primarily data services sold to African mobile network operators and international telecom operators.

Enterprise - primarily data services sold to international multinationals, large and medium enterprises in Africa.

Retail - primarily data services sold to SME's and retail customers in Africa.

• Acquisition and other investment costs

• Foreign exchange (loss) / gain

• Share of profits of associate

Central

South Rest of Rest of the Administration

Africa Zimbabwe Africa World Costs Eliminations Total


Wholesale voice traffic 24,245 - 18 147,083 - (24,434) 146,912


Wholesale 81,638 74,268 36,411 73,432 - (46,420) 219,329

Enterprise 183,325 27,692 48,161 6,065 - - 265,243

Retail 13,637 29,040 6,787 - - - 49,464

Inter-segmental revenue (10,882) (873) (3,461) (55,638) - 70,854 -

Group External Revenue 291,963 130,127 87,916 170,942 - - 680,948

Adjusted EBITDA 59,542 68,042 18,011 69,351 (22,005) (1,552) 191,389

Central






Wholesale 22,603 45,559 29,323 63,834 - (43,260) 118,059

Enterprise 12,389 24,231 32,948 3,813 - - 73,381

Retail 941 23,286 4,100 - - - 28,327

Inter-segmental revenue (12,613) (1,244) (3,715) (51,051) - 68,623 -


Adjusted EBITDA 13,041 37,146 11,978 71,800 (13,611) (4,158) 116,196

The following is an analysis of the Group's revenue and results by reportable segment for the 12 months period ended 28 February 2017.

Group revenue can be classified under four operating and reportable segments as follows:

Wholesale voice traffic - primarily revenue from international voice interconnects between mobile network operators and international

telecom carriers.

The measure of reporting profit for each operating segment, that also represents the basis on which the Chief Operating Decision Maker

reviews segment results, is Adjusted EBITDA. Adjusted EBITDA is defined as earnings before profit before interest, taxation, impairment and

amortisation, and is also presented before recognising the following items:

The group's operating and reportable segments are based on geographical areas. The group's core business is situated within Africa and

management has aggregated African countries where the individual country revenue falls below 10% of total group revenue (Rest of Africa).

The group also has support operations based outside of Africa which have been aggregated into a separate segment (Rest of the World).


6




3. Segment information (continued)

3.1 Segment revenue and results (continued)

Central






Wholesale 22,148 36,745 9,661 18,430 - (10,814) 76,170

Enterprise 51,338 6,856 12,618 1,306 - - 72,118

Retail 3,276 7,548 1,768 - - - 12,592

Inter-segmental revenue (3,350) (169) (727) (13,670) - 17,916 -


Adjusted EBITDA 16,485 32,499 3,967 16,549 (9,292) 872 61,080

Central






Wholesale 9,379 13,699 7,566 22,971 - (11,241) 42,374

Enterprise 11,254 6,696 8,938 (1,326) - - 25,562

Retail 856 6,182 1,295 - - - 8,333

Inter-segmental revenue (3,156) (246) (1,025) (16,435) - 17,237 (3,625)


Adjusted EBITDA 6,023 13,787 3,029 21,246 (3,001) (1,675) 39,409



7




4. Interest income

28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000


INTRECEXTInterest received - bank / external 2,443 470 422 240

INTRECICInterest received - inter-group (note 15) 940 1,084 (112) 389

3,383 1,554 310 629

5. Finance costs

28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000


INTPDEXTInterest on bank overdraft and loans 54,278 9,804 (7,410) 3,305

Finance arrangement fees 24,683 3,898 24,683 3,898

FINCHGICInterest paid - related party (note 15) - 83 - -

78,961 13,785 17,273 7,203

6. Taxation

28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000


CORPTAXCurrent taxation 8,674 3,682 6,284 2,301

DEFTAXDeferred taxation 7,657 4,244 6,029 1,434

WHTAXWithholding taxation 1,263 1,111 243 601

Total taxation 17,594 9,037 12,556 4,336

7.

28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000

(Audited) (Audited) (Audited) (Audited)

Cost

Opening balance 145,833 9,558

Acquisition of subsidiaries 635 129,997

Foreign exchange (loss) / gain 14,054 6,278

Closing balance 160,522 145,833

GWLTUKLiquid Telecommunications Limited 2,850 2,850

GWLTZData Control and Systems (1996) (Private) Limited t/a Liquid Telecom Zimbabwe 1,441 1,441

GWLTZOLZimbabwe Online (Private) Limited 2,821 2,821

GWNEOLiquid Telecommunications Holdings South Africa (Pty) Limited 146,927 132,873

GWRBSLHAI Telecommunications Limited 2,201 2,201

GWRTHLRaha Tanzania Holdings Limited 4,037 3,402

GWTPSIOTransaction Payment Solutions Indian Ocean Limited 245 245

160,522 145,833

The following key assumptions were used for the value in use calculations:

Goodwill is tested at least annually for impairment. The recoverable amounts of the cash generating units (CGU) were determined based

on the value in use calculations. The calculations mainly used cash flow projections based on financial budgets covering a three to five-year

period.

• Growth rates: the group used steady growth rates to extrapolate revenues beyond the budget period cash flows. The average growth

rates used ranged from 5% to 10%. • Discount rates: discount rates ranged from 13.5% to 18.0%. Discount rates used reflect both time value of money and other specific risks

relating to the relevant CGU and operating country.

Goodwill


Goodwill acquired in a business combination is allocated at acquisition to the Cash Generating Units (CGU’s) that are expected to benefit

from that business combination.



8




8.

Group

Other

Operating Computer Fibre Customer Work in Intangible

Licence Software Optical - IRU Relationships Progress Assets Total


Cost:

At 1 March 2017 23,524 38,041 85,935 56,055 3,154 26,417 233,126

Acquisition of subsidiaries - - - 4,149 - - 4,149

Purchases during the year - 2,804 17,671 - 306 - 20,781

Disposals during the year (1,784) (496) - - (68) - (2,348)

Reclassification (note 14) - 540 8,047 - (540) - 8,047

Transfers from / (to) fixed assets (note 9) 296 (27) 190 - 6 - 465

Foreign exchange differences 2,431 3,879 2,296 8,233 - 4,792 21,631

At 28 February 2018 24,467 44,741 114,139 68,437 2,858 31,209 285,851

Accumulated amortisation:

At 1 March 2017 4,266 30,381 23,299 50 - 734 58,730

Amortisation 1,413 3,300 7,123 4,409 - 9,953 26,198

Disposals during the year - (124) - - - - (124)

Transfers to fixed assets (note 9) - (4) - - - - (4)

Reclassification - - 8,047 50 - (50) 8,047

Foreign exchange differences 931 3,215 1,346 412 - 1,179 7,083

At 28 February 2018 6,610 36,768 39,815 4,921 - 11,816 99,930

Carrying amount:

At 28 February 2017 19,258 7,660 62,636 56,005 3,154 25,683 174,396

At 28 February 2018 17,857 7,973 74,324 63,516 2,858 19,393 185,921

Intangible assets

9




9.

Land and Furniture Computer Network Motor Work in Fibre

buildings and fittings equipment equipment vehicles progress infrastructure Total

USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000

Cost:

At 1 March 2017 56,875 10,227 30,711 77,720 8,362 41,505 804,658 1,030,058

Acquisition of subsidiaries - 26 68 633 54 - 686 1,467

Additions 13,447 1,130 4,059 8,129 692 72,514 90,691 190,662

Disposals - (772) (569) (870) (342) (659) (2,072) (5,284)

Transfers 2,895 18 259 4,788 - (42,983) 35,023 -

Transfer from / (to) intangible assets (note 8) 303 - - (276) - (492) - (465)

Transfer to inventory - - - - - (9) - (9)

Foreign exchange differences 4,962 483 2,944 1,539 1 6,148 58,779 74,856

At 28 February 2018 78,482 11,112 37,472 91,663 8,767 76,024 987,765 1,291,285

Accumulated depreciation

At 1 March 2017 14,249 7,765 23,382 57,039 5,157 (2,257) 323,732 429,067

Acquisition of subsidiaries - 14 43 266 34 - 41 398

Depreciation charge for the year 1,844 960 3,796 10,150 1,230 - 49,835 67,815

Disposals - (738) (135) (280) (278) - (1,769) (3,200)

Transfers 19 - 6 74 - - (99) -

Transfer from intangible assets (note 8) - - - 4 - - - 4

Foreign exchange differences 1,580 384 2,266 1,114 8 - 26,983 32,335

At 28 February 2018 17,692 8,385 29,358 68,367 6,151 (2,257) 398,723 526,419

Carrying amount:

At 28 February 2017 42,626 2,462 7,329 20,681 3,205 43,762 480,926 600,991

At 28 February 2018 60,790 2,727 8,114 23,296 2,616 78,281 589,042 764,866

Property, plant and equipment

10




10. Long-term receivables

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Long term intercompany receivables (note 15) - 5,278

LTLRECLong term receivables 1,153 1,131

1,153 6,409

11. Trade and other receivables

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

TRDRECEXTTrade receivables 114,676 102,745

PROVBDAllowance for doubtful debts (27,123) (20,068)

TRDRECICAffiliated entities (note 15) 48,571 20,806

STLICRECShort-term inter-company receivables (note 15) 74,420 6,043

SUNDRSSundry debtors 17,642 24,040

DEPPDDeposits paid 4,078 3,742

PPMTSPrepayments 29,941 18,091

OTHRECPrepayments to related parties (note 15) 15,073 10,747

277,278 166,146

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Group

31 - 60 days 18,589 15,168

61 - 90 days 6,343 5,054

91 - 120 days 5,270 6,135

121 + days 23,501 17,341

53,703 43,698

Included in past due but not impaired is USD 17.4 million relating to Econet Group. Refer to note 15 for the total breakdown of Econet

Group trade receivables.

The directors consider the carrying amount of trade and other receivables to approximate their fair value.

Ageing of past due but not

impaired

Before accepting any new customer, the group ascertains the creditworthiness and identity of the customer by means of an external credit

scoring system and customer acceptance forms which are required to be filled in by any new customer. The creditworthiness of customers

is reviewed continuously throughout the year.

Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which the company has not

recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still

considered recoverable.

The credit period for the group is 30 days. In determining the recoverability of a trade receivable, the group has considered any change in

the credit quality of the trade receivable from the date credit was initially granted up to the reporting date.

The receivable balances from affiliated entities and other related parties are unsecured, interest free and with no fixed date of repayment.

11




12. Short term portion of long term liabilities and long term borrowings

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Long term borrowings:

LTLSBSAUSD 300 million loan facility - 291,288

LTLSBZStanbic Bank of Zambia Limited 15,529 15,250

LTLTATATata Communications International Pte Limited - 56,487

LT5YRBONDUSD 730 million 8.5% Senior Secured Notes 714,546 -

LTLCISUSD 10 million Cisco loan facility 1,125 3,144

LTLNEOBRDZAR 2.95 billion loan facility - 223,049

LTOBOther long term borrowings 14 184

731,214 589,402

Short term portion of long term borrowings:

STLSBSAUSD 300 million loan facility - 2,263

STLSBZStanbic Bank of Zambia Limited 3,847 -

ST5YRBONDUSD 730 million 8.5% Senior Secured Notes 8,273 -

STLCISUSD 10 million Cisco loan facility 1,927 1,927

STLNEOBRDZAR 2.95 billion loan facility - 75

STOBOther short term borrowings 972 945

15,019 5,210

The USD 300 million loan facility agreement between the company and Standard Bank of South Africa Limited was repaid during the year

ended 28 February 2018. The loan was secured, denominated in USD, bore interest at the rate of Libor plus 5.25% and was repayable by

December 2022 in twenty quarterly instalments starting from 22 March 2018. Liquid Telecommunications Operations Limited, Liquid

Telecommunications Limited act as financial guarantors and provide various types of security. This includes first ranking charge over

assets, charge over all bank accounts, assignment over intercompany loans, assignment over intercompany receivables and assignment

over receivables of obligators. The facility agreement prohibits the company from creating security over its assets and providing security in

favour of any third party without the Bank's formal approval.

As at 28 February 2018, the USD 15.3 million loan facility and USD 8.0 million revolving credit facility between CEC Liquid

Telecommunications Limited and Stanbic Bank of Zambia has the company guaranteeing up to USD 6.5 million in aggregate of these

facilities. The facility agreement also includes first ranking charge over certain assets including bank accounts and receivables of CEC Liquid

Telecommunications Limited. The loan facility is denominated in USD, bears interest at the rate of Libor plus 5.5% and is repayable by

February 2021 in sixteen quarterly instalments starting from June 2017. The revolving credit facility is denominated in USD, bears interest

at the rate of Libor plus 6% and is repayable by October 2019. As at 28 February 2018, CEC Liquid Telecommunications Limited has drawn

down USD 5 million of the facility.

In July 2017, Liquid Telecommunications Financing Plc issued USD 550.0 million senior secured notes. In November 2017, further USD

180.0 million senior secured notes were issued which form a single series with the original notes with a premium of USD 9.0 million. The

senior secured notes bear interest, payable half yearly, at the rate of 8.5% and are payable at maturity in July 2022. As at 28 February

2018, the USD 730.0 million 8.5% senior secured notes due in 2022 issued by Liquid Telecommunications Financing Plc are guaranteed on

a senior secured basis by: Liquid Telecommunications Holdings Limited, Liquid Telecommunications Operations Limited, Liquid

Telecommunications Limited, Liquid Telecommunications Investments Limited, Liquid Telecommunications Kenya Limited, Liquid

Telecommunications Holdings South Africa (Pty) Limited, Liquid Telecommunications Operations SA (Pty) Limited, Liquid

Telecommunications South Africa (Pty) Limited with various types of collateral. Such collateral includes (among other things): (i) share

pledges and charges over assets, and including bank accounts, (ii) assignment over present and future intercompany loans receivables and

agreements (iii) assignment over receivables including trade debtors, intellectual property rights and insurances, and (iv) deed of

hypothecation over trademarks.

The long term payable to Tata Communications International Pte Limited was unsecured and bore interest at the rate of 4%. The loan was

repaid during the year ended 28 February 2018.

The USD 10 million loan facility agreement between Liquid Telecommunication Limited and Cisco Capital is denominated in USD, bears

interest at the rate of 3.07% and is repayable by October 2019. The company provides a guarantee up to the amount outstanding. As at

28 February 2018, there is amount of USD 3.1 million outstanding.

12




12. Short term portion of long term liabilities and long term liabilities (continued)

13. Trade and other payables

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

TDPAYEXTTrade accounts payable 96,120 79,071

TDPAYICPayable balance to affiliated entities (note 15) 4,358 3,813

ACCRUALSAccruals 82,104 74,045

STAFFPAYStaff payables 3,005 2,610

VAT Transaction taxes due in various jurisdictions 5,275 2,431

STLONEUnfavourable contracts 1,156 3,176

5YRBPSTSenior secured notes premium 1,930 -

OTHPAYOther short term payables 7,373 10,158

OTHPAYRCOther payable to related company (note 15) - 990

201,321 176,294

14. Deferred revenue

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

DEFREVLTLong term portion of deferred revenue 53,702 42,829

DEFREVSTShort term portion of deferred revenue 27,188 22,027

80,890 64,856

Deferred revenue mainly relates to revenue billed in advance for the group's data and other services.

The ZAR 2.95 billion (Equivalent USD 223 million as at 28 February 2017) loan facility was repaid during the year ended 28 February 2018

and is an agreement between Neotel (Pty) Limited (currently known as Liquid Telecommunications South Africa (Pty) Limited), Standard

Bank of South Africa Limited and Nedbank Limited which is secured, denominated in South African Rand, bears interest at the rate of Jibar

plus 4.75% for the first 9 months, 5.25% for the next 3 months, and 5.75% for the remaining 3 months, is payable on a quarterly basis and

the capital is repayable in May 2018 in one lump sum. Neotel Business Support Services (Pty) Limited (South Africa) Limited and Neotel

(Pty) Limited are the financial guarantors and provide various types of security. This includes first ranking charge over assets, charge over

all bank accounts, assignment over intercompany loans, assignment over intercompany receivables and assignment over receivables of

obligators. The facility agreement prohibits Neotel (Pty) Limited from creating security over its assets and providing security in favour of

any third party without the Bank's formal approval.

The group has a USD 73 million revolving credit facility agreement between the company, Citibank, N.A., Standard Bank of South Africa,

Standard Finance (Isle of Man) Limited, Standard Chartered Bank and ING Bank N.V. The revolving credit facility is secured and is

guaranteed on a senior secured basis by, Liquid Telecommunications Operations Limited, Liquid Telecommunications Limited,), Liquid

Telecommunications Financing Plc, Liquid Telecommunications Investments Limited, Liquid Telecommunications Kenya Limited, Liquid

Telecommunications Holdings South Africa (Pty) Limited, Liquid Telecommunications Operations SA (Pty) Limited, Liquid

Telecommunications South Africa (Pty) Limited. The obligations under the revolving credit facility are secured equally and ratably with the

senior secured notes by first priority liens over the security. The revolving credit facility is denominated in USD, bears interest at the rate of

Libor plus 3.75%, and is available to be drawn before October 2021 to be utilised for general corporate purposes. As at 28 February 2018,

the company has not drawn the facility.

The average credit period on purchases of goods is 30 days. No interest is charged on the trade payables for the first 60 days from the date

of invoice. Thereafter, interest is generally charged at 2% per annum on the outstanding balance. The company has financial risk

management policies in place to ensure that all payables are paid within the pre-agreed terms.

The directors consider the carrying amount of trade and other payables to approximate their fair value.

Amount payable to affiliated entities and related company are unsecured, interest free and with no fixed date of repayment.

13




15. Related party transactions

28/02/2018 28/02/2017 28/02/2018 28/02/2017

USD'000 USD'000 USD'000 USD'000


Sales of goods and services

ECOREVEconet Global Related Group Companies 107,948 74,054 47,360 24,875

Purchase of goods and services

ECOCOSEconet Global Related Group Companies 29,965 35,134 7,248 8,849

Management fees paid

ECOMGTPDEconet Global Related Group Companies 1,500 1,500 375 375

Dividend paid

EWGDIVPDEconet Global Limited 13,500 32,859 13,500 17,620

AMRODIVPDAMRO International Holdings Limited - 15,049 - 4,890

GW Fibre Limited - 990 - 990

13,500 48,898 13,500 23,500

Interest Income

ECOINTRECEconet Global Related Group Companies 940 1,084 (112) 389

Finance costs

AMRO International Holdings Limited - 83 - -

Administration fees paid

DTOS Limited 258 198 59 46

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Long term intercompany receivables

ECOLTLRECEconet Global Related Group Companies - 5,278

Short term intercompany receivables

ECOSTLRECEconet Global Related Group Companies 74,420 6,043

Receivables balances from affiliated entities and other related parties

ECOTRDRECEconet Global Related Group Companies 48,571 20,806

Payable balance to affiliated entities

ECOTRDPAYEconet Global Related Group Companies 4,358 3,813

Other payable to related company

GW Fibre Limited - 990

3 months period ended12 months period ended

In addition to the subsidiary companies disclosed in note 12, the following are related parties to the Liquid Telecommunications Holdings

Limited Group: Worldstream (Pty) Limited (incorporated in South Africa), Econet Global Limited. (Mauritius), Econet Wireless Burundi s.a.

(Burundi), Econet Wireless Private Limited (Zimbabwe), Econet Telecom Lesotho (Pty) Limited (Lesotho), Transaction Payment Solutions

(Private) Limited (Zimbabwe), Econet Vision Limited (Mauritius), Econet Media Limited (Mauritius), Kwese Play (Pty) Limited (South Africa)

and Econet South Africa (Pty) Limited and are referred to as "Econet Global Related Group Companies". They have been disclosed as

related parties due to their common control.

Transactions between the group and its subsidiaries, which are related parties of the group, have been eliminated on consolidation and

are not disclosed in the group note. The transactions between related parties are entered into at arm's length in accordance with the

group's transfer pricing policies. During the year, the group and company entered into the following trading transactions with related

14




15. Related party transactions (continued)

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Prepayments

Econet Global Related Group Companies 15,073 10,747

Proceeds from disposal / transfer of subsidiary

Econet Global Related Group Companies - 22,098

16. Capital commitments

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Authorised and contracted 43,539 17,217

Authorised by directors but not contracted 84,612 78,218

128,151 95,435

17. Post balance sheet events

17.1 Receivables from Econet Group

17.2 Acquisition of the remaining shares in CEC Liquid Telecommunications Limited

18. Fair value measurements recognised in the consolidated statement of financial position

In May 2018, the company entered into an agreement with CopperBelt Energy Corporation PLC to acquire the remaining 50% of CEC

Liquid Telecommunications Limited, a Liquid Telecommunications Group subsidiary based in Zambia, for a total consideration of USD 35

million. Subject to a number of conditions precedent, the company will pay USD 3.5 million upon completion of the agreement with the

balance of USD 31.5 million being paid by 31 January 2019 latest. Upon completion of the agreement, Liquid Telecommunications Group

will own 100% of CEC Liquid Telecommunication Limited.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped

into Levels 1 to 3 based on the degree to which the fair value is observable.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not

based on observable market data (unobservable inputs).

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

On 28 February 2018, the group was owed various trade and short term receivables from Econet Group per Note 15. Econet Group has

paid USD 22.5 million to the group post year end. A further USD 59.9 million will be paid on completion of a facility agreement between

Econet Group and certain financial institutions. Econet Group is currently in the process of fulfilling the conditions to signing the

agreement which are administrative in nature and are expected to be fulfilled.

The capital expenditure is to be financed from internal cash generation and extended supplier credit.

At 28 February 2018 the group was committed to making the following capital commitments:

15




18. Fair value measurements recognised in the consolidated statement of financial position (continued)

Level 1 Level 2 Level 3 Total

USD'000 USD'000 USD'000 USD'000

28 February 2018

Unfavourable contract - - 10,539 10,539

Total - - 10,539 10,539

28 February 2017

Unfavourable contract - - 13,270 13,270

Total - - 13,270 13,270

19. Non-cash transactions

• In 2017 proceeds in respect of the company's disposal of shares in Liquid Telecommunications Operations DRC S.A.R.L to Liquid

Telecommunications DRC S.A.R.L (USD 35,000) had not been received in cash at the end of the reporting period. At group level, no

consideration was paid to the non-controlling interest for the increase in ownership from 70% to 97.5%.

• In 2017 the company disposed of its shares in Liquid Telecommunications Operations SA (Proprietary) Limited (USD 51,821,143) in return

for an equivalent investment in Liquid Telecommunications Holdings South Africa (Pty) Limited (previously known as K2016272836 (South

Africa) (Pty) Limited).

• In 2018 additional USD 9.5 million of Fibre Optical IRU's relates to a non-controlling shareholder's investment in Liquid

Telecommunications Botswana (Pty) Limited.

• In 2018 the Royal Bafokeng Holdings Limited exchange of their shareholding in Liquid Telecommunications Holdings South Africa (Pty)

Limited for a 10.34% stake in Liquid Telecommunications Holdings Limited resulted in a non-cashflow amount of USD 94.9 million.

During the current financial year, the group and company entered into the following non-cash investing and financing activities which are

not reflected in the consolidated statement of cash flows:

• In 2017 proceeds in respect of the company's disposal of an intangible asset to Liquid Telecommunications Operations Limited (USD

5,083,000) had not been received in cash at the end of the reporting period.

• In 2017 the group and company disposed of its shares in Austin Eco Holdings Limited (USD 22,097,512) via a dividend in specie.

16




20. Change in presentation

28/02/2018 28/02/2017

USD'000 USD'000

(Audited) (Audited)

Consolidated Statements of Profit or Loss

Revenue

Cost of sales 254,130 137,734

Administrative expenses 43,424 6,454

297,554 144,188

Interconnect related costs (121,141) (89,516)

Data and network related costs (176,413) (54,672)

(297,554) (144,188)

Consolidated Statements of Cash Flows

Cash flows from operating activities: 55,887 13,785

Cash flows from financing activities: (55,887) (13,785)

- -

b) In the statement of cashflows, the group and company has moved the finance costs paid line item from cash flows from operating

activities to cashflows from financing activities to more accurately show cashflows related to financing of the group and company

activities.

a) In the statement of profit of loss, the group and the company has standardised its’ statement of profit or loss to comply with IAS 1

nature of expense method of presentation. The change resulted in new disclosure items of Interconnect related costs and Data and

network related costs replacing the Cost of sale line item.

During the current year the group has changed its’ presentation of the statement of profit or loss and its’ statement of cashflows as

follows:

17




20. Change in presentation (continued)

USD'000 USD'000 USD'000

12 months period ended 28 February 2018:

Revenue 680,948 680,948


Data and network related costs (176,413) 43,424 (132,989)

Gross Profit 426,818

Other income 1,343 1,343

Dividend received - -

Selling, distribution and marketing costs (19,258) (19,258)

Administrative expenses (59,227) (43,424) (102,651)

Staff costs (114,863) (114,863)Adjusted EBITDA 191,389 - 191,389


Revenue 342,992 342,992





Dividend received 308 308





Revenue 194,938 194,938




Other income 552 552

Dividend received - -





Revenue 104,783 104,783



Gross Profit 65,829


Dividend received 308 308




Management

statement of

profit or loss

Reclassification

of network costs

A reconciliation of the Audited Profit or loss and Management profit or loss is included below:

Audited

Statement of

profit or loss

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